The Future of Smart Technology

US Gov’t to Cablecos: Keep Investing in Broadband Networks

US Lags Behind in Broadband Connection Speeds

Federal Communications Commission Chairman Tom Wheeler and Department of Commerce Secretary Penny Pritzker each took turns urging the United States’ cableco industry to continue investments in their broadband infrastructures. The two government representatives each addressed broadband industry players during the annual NCTA trade show, recently renamed the Internet and Television Expo.

Wheeler delivered a “straight talk” address to an audience of cableco executives, crystallizing a new era for the cable companies that have become the country’s leaders in broadband service. “You are first and foremost broadband companies,” he said. Cablecos’ hybrid fiber-coax networks are now “an essential part of our country’s infrastructure,” he said. “You are no longer the ‘cable’ industry. You are the leading association of leading broadband providers.”

Wheeler’s comments underscore the unique broadband marketplace that exists in the US. The cable companies, which began as video service providers, have now taken the lead in broadband networks — thanks to DOCSIS technologies — while telephone companies continue to lag behind in terms of broadband speeds. For the first time ever, the number of cableco broadband subscribers surpassed the number of cableco pay TV subscribers, in Q2 2014.

The United States, with an average connection speed of 10.5 Mbps, doesn’t even in rank in the top 10 among countries in terms of broadband speed. According to Akamai’s most recent “State of the Internet” report, high broadband adoption is at 39% in the US, and 50 million people in the country are currently not connected to the Internet.

Wheeler has categorized the cable industry has having “important technical advantages, a leading market position, and very limited regulation,” a trifecta that Wheeler deems a very unusual situation. “You don’t have a lot of competition, especially at the higher speeds that are increasingly important to the consumer of online video,” he said.

“The service you offer is critically important to all Americans, from getting and keeping a job, to staying in touch with family and friends, accessing entertainment, engaging with government, not to mention doing schoolwork if you are a student – and countless other applications,” he said. “The broader ecosystem you help support is extremely important to the creation of American innovation.”

That’s why he, President Obama and others are so keen to remind cablecos that — despite the lack of competition from telcos in broadband — they must continue to invest and upgrade their broadband networks. There is no contest between telcos’ DSL and VDSL technologies and cablecos’ DOCSIS, especially at the higher broadband speeds. “A fully competitive marketplace would bring with it intense and constant pressure to continue to improve – just as it did in the days of cable-DSL competition,” Wheeler said. “More competition would be better.”

Wheeler isn’t convinced cablecos will have enough market incentive to continue to upgrade and expand their broadband networks. “History proves that absent competition a predominant position in the market such as yours creates economic incentives to use that market power to protect your traditional business in a way that is ultimately harmful to consumers,” he said.

US Secretary of Commerce, Penny Pritzker, took the stage to address opportunities in public-private partnerships for investments in broadband networks.

The department of commerce oversees the National Telecommunications and Information Agency (NTIA) and the National Institution of Standards and Technology (NIST) – “both of which are very relevant to the digital world, to broadband, to communications,” Pritzker said.

She also co-chairs the Broadband Opportunity Council, an organization that joins the Department of Agriculture and the Department of Commerce for the purpose of seeking new ways in which the federal government can promote broadband deployment, adoption, and more competition.

“The goal of the Broadband Council is really to increase broadband investment,” Pritzker said. “We want to decrease barriers.”

President Obama created the Broadband Opportunity Council earlier this year, as part of his wider agenda to bring high speed wireline and wireless broadband to more Americans. “The President has made access to broadband a very high priority, he knows how important it is for innovation, for education, for the general growth of our economy,” Pritzker said.

One the challenges the US faces in terms of broadband penetration is that as cablecos continue to upgrade their broadband networks in the denser urban centers of the country, the rural communities are being left behind. “The private sector has taken a real lead role in providing broadband service over the last six years,” she said. “That’s not evenly spread across the population, it tends to be in the more urbanized places – which makes sense, that’s where it makes economic sense.”

Pritzker told audience members that the NTIA is currently seeking comment and input from broadband providers in the obstacles and impediments — whether regulatory or otherwise — that prevents cablecos from expanding and upgrading broadband infrastructure in unserved and underserved areas of the country.

“That’s where the federal government has to come in and say, ‘what can we do about the other folks?’” she said. “Because you don’t want to leave that portion of the population behind. We know that access to broadband is absolutely critical to the future of all Americans.”

Image: US Sec. of Commerce Penny Pritzker addresses an audience at NCTA’s Internet and Television Expo.